Guest Column: Energy - the blood of a country

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Tuesday, February 13, 2018

By Andrés Alonso

Vicepresident of the directory of the National Electrical Coordinator of Chile

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Energy is to the economy of a country what blood is to the human body. When blood does not reach the cells in the correct quantity and quality, they do not feed well affecting the functioning of the organs and, ultimately, the whole body. Likewise, if the energy is not supplied with the appropriate security and price to all of us, the cells, and ultimately to the residential, commercial and industrial consumption, the organs of an economy, a whole country will be affected.

Chile could feel the effect of a significant increase in the price of energy during the natural gas crisis imported from Argentina in the past decade, especially since 2004. The measurements indicate that for the two years following this crisis, the Chilean economy of having a GDP growth of approximately 2%.

From the energy point of view, historically, Chile has been characterized by two opposing elements. On the one hand, 35 years ago it was the first country to create a regulation that allowed the liberalization of its energy market based on a solid institutional and legal structure, the basis of an adequate public policy. On the other hand, we have been poor in traditional energy resources. We have hydroelectricity located far from the centers of consumption and low quality coal, as well as practically no economic reserves of gas and oil.

However, this combination of energy poverty with strength in public policy in our country is changing for the better. As a result of technological development, non-conventional renewable energies (NCRE), particularly solar and wind, have had significant cost reductions making them competitive, and fortunately Chile has abundant resources based on these energies.

The effects of this technological development together with appropriate public policies are already being appreciated. In the last two supply bids for electricity distributors carried out in 2016 and 2017, based on the amendments to the Electricity Law made in 2016, a reduction in the prices obtained was observed, so that Chilean consumers will save more than US$20bn over the existing price level in 2013. In the future, Chile will have, as a result of these tenders, one of the lowest energy prices in the world. The supply of these tenders is practically entirely based on NCRE.

Despite the great progress we have made in energy, there is still a pending task. At the level of electrical distribution, a technological revolution is taking place as a result of the reduction of costs in solar panels, energy storage, more powerful and economic sensors, the internet of things, etc. The new leap that Chile must take, as it did 35 years ago, is to become the first country in the world to create a regulation that allows the development of these technologies so that appropriate public policies and competitive energy resources can be integrated into a virtuous circle so that our body, Chile, has the blood it needs to develop – energy.

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The opinions in this article are those of the author and do not necessarily represent the opinions of the national electrical coordinator (CEN), its president or individual directors and are not related to the CEN.

Andrés Alonso is a former student of Singularity University and will be one of the speakers at the SingularityU Chile Summit , to be held on March 14 and 15 in Santiago, where he will talk about Electricity Industry Disruption: Mining and distribution. BNamericas subscribers can obtain a 10% discount to attend the event by completing this form.

The content is the author's full responsibility and does not necessarily reflect the opinion of BNamericas. We invite those interested to participate as a Guest Columnist to send an article for possible. To do this, contact the editor at electric@bnamericas.com.